Losing your job because your employer is experiencing major financial hardships or is getting out of the business and selling the company is less demoralizing than getting fired, but it still carries with it plenty of emotional financial stress. Even if it was not your fault that your employer terminated your employment, you still have to find a new job in an uncertain job market, and until you find a new job, you have to live on a shoestring budget. If your employer offers you a separation agreement, you might hasten to sign it because it is better than starting your new, unexpected job search empty-handed, but the terms of the separation agreement might not be as favorable to you as they originally seem. If your employer offers you a separation agreement, you should contact the Charlotte employment contract lawyers at HKM Employment Attorneys LLP before you decide whether to sign.
What Does a Separation Agreement Include?
In some ways, a separation agreement is the opposite of an employment contract; it outlines the terms under which you will no longer have a working relationship. Separation agreements may include provisions for severance pay, continuation of health insurance benefits, and various other things that appear to be perks, but they almost always include a clause in which you promise not to file a lawsuit against your employer for terminating your employment. In determining whether the separation agreement is a fair substitute for the right to sue your employer for wrongful termination of employment, these are some questions you should consider when reviewing the agreement with your employment contract lawyer:
- How much severance pay, if any, is the employer offering you in the separation agreement?
- Does the separation agreement allow your employer-provided health insurance benefits to continue, and if so, for how long?
- Does the agreement explicitly state that the termination of your employment is not due to misconduct or poor performance on your behalf?
- Does the agreement state that any of the work you produced while working for your employer will remain your property?
- If you signed a non-compete agreement when beginning your employment, does the separation agreement cancel or amend the non-compete provisions of your employment contract?
It might seem like your employer is being generous to you if they offer you severance pay in an amount equal to several months’ salary, promise to provide good references in your future job search, or even release you from a non-compete agreement, thereby making it easier for you to search for a new job in your area. Do not sign the agreement without first reviewing it with a lawyer, though, because just because the agreement makes concessions to you, it might also require you to give up rights that you would be wiser to keep.
Notice of Eligibility to Collect Unemployment Benefits
Even before the pandemic, more than half of Americans were living paycheck to paycheck, unable to afford an emergency expense of $400 without borrowing money or charging it to a credit card. Therefore, they might sign the separation agreement because the severance pay offer is too tempting to pass up. They might also sign because doing so would remove an obstacle to collecting unemployment benefits if they are unable to find a new job by the time the severance money runs out. You cannot collect unemployment benefits if you are voluntarily unemployed, and a separation agreement is strong evidence that it was not your choice to leave your job.
At the beginning of the COVID-19 pandemic, in anticipation of a situation where many workers would be laid off from their jobs and need to apply for unemployment benefits, North Carolina enacted a law requiring employers who terminate the employment of workers due to pandemic-related economic hardships to provide the employees with notices of eligibility to collect unemployment. If you got laid off from your job during the pandemic, you are entitled to a notice of eligibility to collect unemployment benefits, whether or not your employer offered you severance pay or asked you to sign a separation agreement. You are not automatically entitled to receive this notice if your employer fired you due to misconduct.
Is it Better to Accept the Separation Agreement or to Reserve the Right to File a Lawsuit?
If you are dating someone and they break up with you by saying, “It’s not you, it’s me,” you are wise to walk away from the relationship before your ex gets a chance to show you their truly ugly side. To borrow another love analogy, do not be fooled by a prenuptial agreement that appears generous if your fiancé drafted the agreement without your input, and especially if your fiancé asked you to sign it right before the wedding. When employers offer separation agreements, they are not doing it out of the kindness of their hearts. Sometimes they are doing it because they are worried that you will sue them; if they had not done something lawsuit-worthy, they would not have this fear. The less time your employer gives you to make a decision about accepting the agreement, the more underhanded they are.
When you discuss the separation agreement with your lawyer, ask yourself whether the separation agreement is just a cover for something more sinister, like wrongful termination of employment or discrimination. Is the employer trying to get you to waive your right to sue them because you have a good reason to sue? Did your employer terminate your employment in retaliation for expressing concern about discrimination or workplace ethics, and are they just using a “corporate restructuring” as a cover? Your employment lawyer can help you see through the façade and get to the truth.
Contact a North Carolina Employment Lawyer About Separation Agreements
Do not let your employer pressure you into signing a separation agreement. An employment lawyer can help you decide whether the separation agreement your employer has asked you to sign is fair to you. Contact the employment lawyers at HKM Employment Attorneys LLP in Charlotte, North Carolina to set up a consultation.